In view of rising inflation worldwide, Agustin Carstens sees an urgent need for action. The head of the Bank for International Settlements sees the world economy on the verge of historic change. Accordingly, inflationary pressures could last longer than expected.
The head of the Bank for International Settlements (BIS), Agustin Carstens, has called on the central banks to take urgent action to combat rising inflation worldwide. According to the manuscript, in a speech at the US Federal Reserve’s symposium in Jackson Hole in the US, Carstens also warned that the surge in inflation could last longer in many countries. “Monetary policy must face the urgent challenge of dealing with the current threat of inflation,” said Carstens.
The Basel-based BIS is considered an important think tank for international monetary policy. In this environment, central banks cannot hope to smooth out all economic bumps and must instead focus first and foremost on keeping inflation low and stable, Mexico’s former central banker urged at the central bank symposium. The annual conference, hosted by the Federal Reserve Bank of Kansas City, is often used by monetary authorities as a forum to prepare important monetary policy decisions.
“As any pilot will tell you: when the warning lights are on, timely and decisive action pays off,” remarked Carstens. Many economies are struggling with inflation numbers they haven’t seen in decades. Interrupted supply chains in the course of the Corona crisis and the consequences of the Ukraine war, such as skyrocketing energy prices, are causing consumer prices in many countries and regions to rise more than they have in a long time. From Carstens’ point of view, processes such as declining globalization in trade and the resurgence of geopolitical alliances mean that access to global production networks and international financial markets can no longer be taken for granted.
The BIS boss also addressed demographic developments. According to Carstens, even if the disruptions to supply chains caused by the pandemic and the war should fade, the importance of such supply factors for inflation will remain high. The world economy seems to be on the verge of a historic change. “In that case, the recent increase in inflationary pressures could prove more lasting,” the BIS chief warned.
